Gindalbie blames inflation, carbon tax for costs

The extra funds were needed to account for the strength of the $A and lower iron ore prices seen since Gindalbie’s last forecasts 15 months ago, a spokesman said.
Photo: Reuters

by
Ayesha de Kretser

Gindalbie Metals
says mining costs have risen sharply before commercial production from Western Australia’s first big magnetite project and the miner blames inflation and the carbon tax for the additional impost.

Production costs are now expected to be between $72 and $76 a tonne, from a previous forecast of $65 to $68 a tonne.

“Revised product cost guidance reflects general inflation and the impact of the Carbon Tax since the previous forecast in June 2011," the company said in a statement.

Gindalbie also said it would raise $62 million to bolster working capital as it ramped up magnetite concentrate production from its 50:50 Karara joint venture with China’s Anshan Steel, which is also Gindalbie’s biggest shareholder.

Gindalbie said $22 million of shares would be placed with Anshan for the Chinese steelmaker to keep its 36 per cent stake in the miner.

A further $40 million will be offered to sophisticated and institutional investors at a price of 25.5¢, a 13.6 per cent discount to Gindalbie’s closing price on November 29.

The extra funds were needed to account for the strength of the $A and lower iron ore prices seen since Gindalbie’s last forecasts 15 months ago, a spokesman said.